Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Silver Enterprises has acquired All Gold Mining in a merger transaction. The following balance sheets represent the premerger book values for both firms: Silver Enterprises
Silver Enterprises has acquired All Gold Mining in a merger transaction. The following balance sheets represent the premerger book values for both firms: |
Silver Enterprises | |||||||
Current assets | $ | 6,500 | Current liabilities | $ | 4,500 | ||
Other assets | 2,900 | Long-term debt | 9,200 | ||||
Net fixed assets | 32,300 | Equity | 28,000 | ||||
Total | $ | 41,700 | Total | $ | 41,700 | ||
All Gold Mining | |||||||
Current assets | $ | 3,000 | Current liabilities | $ | 1,690 | ||
Other assets | 850 | Long-term debt | 0 | ||||
Net fixed assets | 13,600 | Equity | 15,760 | ||||
Total | $ | 17,450 | Total | $ | 17,450 | ||
Construct the balance sheet for the new corporation assuming that the transaction is treated as a purchase for accounting purposes. The market value of All Gold Mining's fixed assets is $14,850; the market values for current and other assets are the same as the book values. Assume that Silver Enterprises issues $21,500 in new long-term dept to finance the acquisition. |
Silver Enterprises, post-merger | |||||
Current assets | $ | Current liabilities | $ | ||
Other assets | Long-term debt | ||||
Net fixed assets | Equity | ||||
Goodwill | |||||
Total | $ | Total | $ | ||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started